Canadian securities class actions dipped in 2012

Fewer securities class actions were filed in Canada in 2012 than in the prior year, according to data compiled by the NERA Economic Consulting.

The number of securities class action cases dipped to nine for 2012, down from the record 15 that were issued in 2011, according to NERA’s report, Trends in Canadian Securities Class Actions: 2012 Update. All nine cases were filed in Ontario. The 2012 tally is lower than the average of 12 cases a year since 2008.

Amid the changes, NERA notes that none of the 2012 filings involved claims against North American-listed Chinese companies, something that had been a notable trend in prior years.

Three securities class actions were settled in 2012. Two statutory claims brought under Ontario’s Bill 1998 settled: Arctic Glacier for $13.8-million; and Gammon Gold for $13.25-million. The third action, a case relating to the Earl Jones Ponzi scheme, was settled by Royal Bank of Canada for $17-million. NERA’s data pins the median settlement for all Canadian securities class action settlements at $13-million.

There was a notable partial settlement in 2012, NERA says. Ernst & Young agreed to pay $117-million to settle claims relating to its role as auditor of Chinese company Sino-Forest. “This partial settlement, if approved, would represent the largest settlement in a Bill 198 case to date,” the report states.

NERA lists 51 active Canadian securities class actions as of Dec. 31, 2012 — nearly double the number of active cases four years ago. According to NERA’s database, 100 securities class actions have been filed in Canada since 1997.

“The growing number of active cases on the docket and the recent court rulings suggest that we may see both more cases move to the leave application and certification stages and possibly more settlements in 2013 than we saw in 2012,” says Bradley Heys, NERA vice president and co-author of the report.